Friday, March 13, 2015

1MDB Stories You Must Read

During the 1990s, the 1st Generation Independent Power Plants (IPP) were set-up and during that time there was much anger from TNB and the late TNB boss, Ani Arope who refused to sign and then resigned.

The original IPP players then were Tan Sri Syed Mokhtar's group, YTL, Genting and Ananda Krishnan.

Sime Darby was the other one but since it was seen as a government company, it did not attract as much attention as the other four but needless to say that these plants raked in billions per year in profits.

For many years, these four IPPs together with Tun M has been attacked by opposition for years saying that these are crony deals and why the government had to subsidize these IPPs.

In fact, in May 2011 Lim Guan Eng called these IPPs as "Big Opium" plants that requires RM19 Billion of subsidies per year. http://tinyurl.com/lkl6t4h

In quick succession, 1MDB bought over Ananda's power plants business (March 2012) and Genting's IPP plants (Aug 2012).

Then in October 2012. The Energy Commission announced the results of the latest IPP Power Purchase Agreement (PPA) concessions:

The results were a big surprise.

No extension allowed for Ananda's power plant (now under 1MDB - and which is why Ananda had to pay back the RM2b bridging loan for 1MDB) nor YTL.

No new plants or new concessions granted for Genting, TS Syed Mokthar, YTL or Ananda Krishnan - none of the original 4 alleged "cronies".

The only new concessions or power plant awards were either to 1MDB or Tenaga - no other parties.

Maybank research had remarked that the "Sweetheart deals are over." and that all renewed deals were done on a commercial basis at competitive rates. http://tinyurl.com/mdqlgdn

"The new IPP IRRs are now in mid-single digits, a vast improvement from the mid-teen IRRs enjoyed by the first-generation IPPs.".

Much of the mistakes of the past that cost Malaysians, Petronas and TNB tens of billions per year (and possibly more than RM100billion over the two decades) have been fixed by Najib, the Energy Commission and 1MDB.

In fact, Malaysia was supposed to have a scheduled electricity tariff increase in July 2014 and Jan 2015 under the "fuel cost pass through (FCPT)" mechanism implemented in Jan 2014 but 1MDB and other IPPs say no need because of the revised and corrected power purchase agreements.

And electricity rates were even reduced starting from March 2015 - due to falling coal prices as well as the much cheaper IPP tariffs.

And TNB started to record big profits starting in 2013, 2014 and in 1st Quarter 2015, broke the record to register RM2.3 billion net profit for just 3 months!

TNB gets to enjoy much bigger profits while Malaysians get to enjoy cheaper electricity rates when fuel prices drop while Petronas no longer needs to subsidize as many private interests.

TNB interests protected, Petronas interests protected.. Malaysian electricity users interests protected - These are the winners.

But who loses? Who are the biggest losers when such sweetheart deals are no more and who would these rich and powerful losers complain to?

What would they want to do?

Perhaps this is why there is so much anger towards 1MDB and PM Najib - even from senior UMNO leaders. After read these stories, hopefully they will get a better picture.

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